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  • FIRST POST
    • Former MSE Wendy
    • By Former MSE Wendy 18th Mar 08, 3:18 PM
    • 868Posts
    • 1,782Thanks
    Former MSE Wendy
    April 2008 Income Tax and NI Changes: How will they affect you?
    • #1
    • 18th Mar 08, 3:18 PM
    April 2008 Income Tax and NI Changes: How will they affect you? 18th Mar 08 at 3:18 PM
    Updated 2 September 2008
    (Comments in the discussion may relate to earlier incarnations of this information)


    After the huge '10p tax row' in April, the Government upped everyone's income tax personal allowance (the amount you pay no tax on) from £5,435 to £6,035 to make up for it.

    This takes effect next Sunday (7 Sept), so if you earn between £6,035 and £40,835, watch your payslip to ensure you get the extra cash.

    What's the background?

    In the government's 2007 Budget report, it got rid of the old 10% rate of income tax, and reduced the 'basic rate' from 22% to 20%. Yet when this change was implemented in April 2008, public uproar followed as people earning between around £6,000 and £15,000 actually brought home less pay.

    To fix this imbalance, on 13 May 2008, the Chancellor announced everyone's tax-free Personal Allowance for 2008/09 (i.e. this tax year) would rise £600 to £6,035, to reimburse those who lost out when the 10p tax-rate was scrapped; and give a tax cut to many others.

    What happens now?

    Even though this was announced in May, personal allowances officially increase to £6,035 on 7 September.

    For all basic-rate taxpayers the impact is a £120 gain; this money will go straight into your pay, with the first £60 coming in September, and an extra £10 per month for the rest of the financial year until next April.

    You shouldn't need to do a thing in order to get this cash; if it doesn't appear in your next paypacket, speak to whoever deals with the payroll at your place of work.

    Will this make up for the end of the 10% band?

    If you are a basic-rate taxpayer earning £6,035 or more, you'll pocket £120 more over the year than you would have done before this announcement.

    This will make up what you lost when the 10% band disappeared, unless you earn between £7,130 and £9,075, when you could still be up to £30 out of pocket compared to last year. The Govt says many will have had tax credit rises too and possibly balance this out, but if it applies to you read my full Benefits Check-up article to find out more.

    Higher Rate Taxpayers won't gain (or lose)

    For higher-rate taxpayers, the 40% threshold will shift down by £600 to £40,835, meaning most will earn exactly the same as they would have done (if you earn between £40,835 and £41,460, you make a small profit).

    See the Chancellor's full statement from May 2008

    For a bigger range of data and figures for overs 65s go to HMRC rates


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    Last edited by Former MSE Andrea; 02-09-2008 at 6:51 PM.
Page 3
  • Meltdown
    littlekitty,
    the 2 tables aren't covering the same thing ...
    The MSE table is looking at your "earnings"; thus you don't pay any tax on the first £5,435 (the single person's allowance).
    The HMRC table is simply looking at "taxable income", i.e. what you are left with after discounting the single person's allowance.
    (In essence, add £5,435 on to the HMRC figures, and you get the MSE ones. Similar thing for last year.)
    Last edited by Meltdown; 09-04-2008 at 12:30 PM.
    • Paul_Herring
    • By Paul_Herring 9th Apr 08, 12:26 PM
    • 6,944 Posts
    • 3,622 Thanks
    Paul_Herring
    I don't know where you got your tax bands from, but they are incorrect.

    From the HM Revenue and Customs Site:



    Would be nice if higher rate was really over 41K, but it just isn't true!!
    Originally posted by littlekitty
    You're totally misunderstanding that table on the HMRC website, which doesn't include the tax-free allowance.

    The higher rate does indeed start (for most) when you earn over 41K. If you don't get a P2 (so assuming your tax free amount is 5435) this year, you get taxed:

    0% - 0 - 5435
    22% - 5435 - (5435+36,000) = 41,435
    40% - (5435 + 36,000) = 41,435 +


    Which is what the other table is telling you. If anything is wrong with it it's the fact that it doesn't explicitly point out that your tax free amount may not be what I've assumed above, so the actual numbers may differ slightly.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • StevenP
    Ok guys

    im on 18135


    Am i better or worse off ?

    I live with my partner who is on 17500 we have no kids and arent aware that there is anything we can claim.....


    Steve
  • Meltdown
    And to make things clear, if your earnings were £7,455 last tax year and this;
    last year, your income tax bill was 10% on £2230 i.e. £230
    this year, your income tax bill is 20% on £2020, i.e. £404.
    In other words, you are £174 worse off.

    Er, sorry, Messrs. Brown & Darling, is that calculation too hard for you ...
    (Not everyone is entitled to your benefits ...)
    • icefall
    • By icefall 9th Apr 08, 1:14 PM
    • 1,105 Posts
    • 721 Thanks
    icefall
    What is the government thinking of? Not the voters obviously...
    I always wanted to be a procrastinator, never got round to it...
  • Meltdown
    Ok guys im on £18135 Am i better or worse off ?
    I live with my partner who is on £17500 we have no kids and arent aware that there is anything we can claim.....
    Steve
    Originally posted by StevenP
    Total income tax due last tax year for both of you = £2571 + £2432 = £5003

    Total income tax due this tax year for both of you = £2540 + £2413 = £4953

    (Strictly speaking I should take interest on savings into account, but I am assuming this isn't enough to put you into a higher tax bracket - it would have to be over £20K interest.)

    So overall you are £50 per annum better off (just under £1 per week).
    Don't go spending it all at once ...
    Perhaps save it in a cash ISA ...
    • Mikeyorks
    • By Mikeyorks 9th Apr 08, 1:31 PM
    • 10,287 Posts
    • 4,696 Thanks
    Mikeyorks
    I don't know where you got your tax bands from, but they are incorrect.
    Originally posted by littlekitty
    Same place you got your's from ..... only the article interpreted them correctly!

    You've quoted the taxable bands ..... now go back and look at the allowances bands. Same page ... table immediately above, on the HMRC page. Then you add one to the other ..... and get the result first quoted?
    If you want to test the depth of the water .........don't use both feet !
  • Nomad25
    I have a dufus question. I am self-employed and my y/e is March. Out of interest, do I calculate my tax burden [payable in July] using the old figures or the latest?
  • gordeaux
    get rid of this labour government next time round- dare I say it but the conservatives seem to be listening to the bottom end as Labour did with businesses and white collar workers in 1997.
    Something has got to be better than new labour in grabbing mode- they already filched the pension pot during their 1st year in power.
  • gordeaux
    Betrayed
    get rid of this labour government next time round- dare I say it but the conservatives seem to be listening to the bottom end as Labour did with businesses and white collar workers in 1997.
    Something has got to be better than new labour in grabbing mode- they already filched the pension pot during their 1st year in power.
    I vote martin for the next prime minister.
  • firebird1
    Well, I am happy to be on the positive side of the graph. But I can't help but feel that there is something wrong with the worst paid workers being worse off, especially with the effect of other bills rising.
    Originally posted by simongregson
    ,
    ,
    ,
    Hi Simon,

    What will happen is, every one who was around the 7500 pa level will simply just throw the job, and claim benefits.

    G.
  • firebird1
    Sadly for all of us, the only viable alternative right now (the Lib Dems, sadly enough, are nowhere near power) are the actual Tories.

    Christ help us...
    Originally posted by ShelfStacker
    ,
    ,
    ,
    Yup,

    Looks like the Libdems could be in for a landslide. !
  • gordeaux
    lib dems nationally for the control of parliament are a dead duck but will do well in the council elections. I guess most people will be voting with their hopes rather than toeing their political backgrounds. I can't see nick clegg as a pm. That nice Mr Brown will string things out until he has to have an election - just as John Major had to, but expect one or two sweeteners from the chancellor next year.-maybe. I am out of the lower figures and whilst I am ok I have given some money to the British Legion and to cancer- the first time for ages. I would not mind being taxed the 2p in the pound provided it helps people lower down. Getting rid of the 10p band is shocking and indefensible - it was there to help less fortunate. this latest money grabbing is to try to bribe us next year - but we won't forget that Labour- New Labour has betrayed the poorest people in this country.
  • Sarahx
    I couldn't agree more.
    My partner and I earn uner 16k a year each, with no kids, a mortgage and a car, living in Cornwall.
    We will now pay more tax, water rates, electric, gas, petrol, etc. etc.
    If we are lucky we will get 2 - 3% pay rise.
    This is already wiped out by the gas/electric alone.

    The only way for us to get some cash back is to have kids!:confused:
    Not an option.
    Originally posted by Kernow Kid

    Hold on..... I earnt in excess of 38,000 last year. I have worked full time hours, been called in for overtime at the last minute and grafted really hard for this. Should my purse be hit hard ??? Answer the question, then read on.....

    2 x 16K = 32K income - no children

    me = 1 x 38k income - 3 children (1 going to uni this year so fee's etc for me to help her with)
    I am a single parent, I recieve no hand-outs other than family allowance which EVERY parent gets. I get no tax relief (my ex does) I work really hard to ensure I can afford everything we need (including a 700 mortgage). My basic pay is not so high I just work overtime instead of having a life so I can be self supporting and not use the benefit system which should be there to assist people when there are no other options. (eg: those on very low incomes or genuinly unable to work). Why should I be subjected to a higher tax band? The more overtime I do the more NI and TAX I pay anyway why do I have to give more?

    If you feel you'd be far better of with children just to get extra financial help maybe I should just stop slogging my guts out and go on benefits? (NOT A CHANCE!):confused:

    So to ask the question again.....should I really pay more tax and reduce my income.

    I may earn a reasonable income, but definately not rich!! Will compare cars to prove it if you like!!!!!

    Sarah x
    Last edited by Sarahx; 09-04-2008 at 5:05 PM.
    Night Owl Number 14 (coz I love number 4 and that was taken!! )
  • Financial Desert
    Tax Changes for 08/09
    Wendy,

    Thank you - Super research to discover the sneeky things that the government is up to.

    I had not read anywhere else about the new 10% savings allowance for those who's 'taxable non-savings income' is less than the personal allowance.
    It will affect my household.

    Also of course the allowance cannot be given as the tax year progresses but will have to be especially claimed from HM Customs and Revenue following the end of each tax year. Postive cash flow for government negative cash flow for the taxpayer as always.
  • weenerbunny
    I'm trying to work out how much worse off me and the other half will be. I work full time, 13,500pa wage. He works temp, overall probably around 9-10kpa.

    We're not entitled to council tax benefit, jobseekers, low income or any other benefits, and never have been despite our changing circumstances.

    ...

    Seriously though, when I was a student on part-time wage and he was fresh out of homelessness? No benefits, because I was a student.
    When I quit uni because we couldn't afford it, and he lost his (then) temp position? No benefits, because he hadn't earned enough money when he was living on the streets.
    When I got a full time, low-paying dead end job? I was working too many hours.

    Exactly who IS entitled to assistance with their living expenses? Why is the government surprised that people are borrowing more than they can repay, spiraling into debt, not buying houses, taking up daft loans, not declaring cash-in-hand work...
    • MimiJane
    • By MimiJane 9th Apr 08, 7:13 PM
    • 7,649 Posts
    • 50,136 Thanks
    MimiJane
    But you don't get tax credits unless you are living on your own do you? I have never been able to get them because I live with my partner even though my wages are low
    Originally posted by carolineb23
    I live with my partner who is entitled to WTC after "returning to work" (government scheme) after a long illness. He works part-time. I am unable to work. As far as I am aware, it depends on your cumulative household income, although other factors are also taken into account, such as an allowance for being over 50.
    Last edited by MimiJane; 09-04-2008 at 7:17 PM.
    Wins since 2009 = 16,880


    MANY THANKS TO ALL OPS. - xx
  • foc
    I agree with almost everything you say except for one thing,THIS IS NOT a Labour Govt.I've been a Labour supporter all my life and if I know one thing,this shower are more Tory than the bloody Tories!!
    Originally posted by mickyrush
    There Is a possible alternative to the big buisness party's.

    http://cnwp.org.uk/
  • sluggy1967
    One group I haven't heard mentioned in all the articles and programmes I've seen about this recently is those on taxable benefits.

    My husband receives long term IB - he currently gets taxed on it to the tune of about £5 a week - his tax bill will, if I've calculated it correctly, almost double - it may only be a low figure still, but it will make a heck of a difference to us. And there's no money coming from elsewhere for us to balance things out with, unless someone knows otherwise.

    Originally posted by earthmother
    We are in the same position, my husband received IB & a small pension, whilst I can't work due to being his full-time carer so, we cannot claim Working Tax Credits (I guess that brings us into the category of "scroungers" according to many!!!!) so this has left us worse off. "Fortunately" my husband has now been officially declared blind, so we will benefit from getting a Blind Person's Allowance which will make us more or less the same, I think (we won't know for a month of course). So, I guess we can thank our lucky stars that he is blind!!!!!!
    • orangesmartie
    • By orangesmartie 10th Apr 08, 8:19 AM
    • 329 Posts
    • 831 Thanks
    orangesmartie
    I'm quite confused by this whole thing.

    I live in Devon and the cost of living is quite high. In order to almost make ends meet i work two jobs. I work full time for the NHS and earn 16,799 gross a year. I also work part time at 5.52 an hour - i do 19.75 hours a week.

    I'm not entitled to any benefits or help and i get taxed on any overtime that i do. I can't see that i'm going to be any better off now than I was or that I'm going to be able to reduce my hours so i don't have to work seven days a week.

    To w
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